Biosurfactant producing bacterium was identified as Pseudoxanthomonas sp. PNK-04 based on morphological, physiological, biochemical tests and 16S rRNA gene sequencing. This strain was screened for biosurfactant production using different carbon sources by measuring the surface tension of the medium at different time intervals, and hemolytic activity. The produced biosurfactant was found to be a rhamnolipid based on the formation of dark blue haloes around the colonies in CTAB–methylene blue agar plates and the content of rhamnose sugar. The rhamnolipids produced by this bacterium were found to contain mono- and dirhamnose units linked to β-hydroxy alkonic acids containing 8–12 carbon atoms. This biosurfactant has high emulsifying activity when compared to chemical surfactants such as Tween-80 and Triton X-100 with respect to aliphatic and aromatic hydrocarbons. Further, the biosurfactant stimulates the degradation of 2-chlorobenzoic acid, 3-chlorobenzoic acid and 1-methyl naphthalene by Pseudoxanthomonas sp. PNK-04 probably by aiding in the uptake and increasing the solubility.